Pushed up by news that Treasury may allow $50 billion of repayment from banks involved in TARP, equities opened higher Tuesday, but after the first hour of trading indexes are struggling to hold onto those gains. Meantime, oil is once again approaching $70 per barrel, and 10-year yields are down a tenth to 3.84%, 

As of 10:30, the S&P has just dropped below the open, down 0.01% to 939. The Dow is also down 0.16% to 8750, while the Nasdaq has stayed afloat, up 0.41% at 1850.

Data releases had minimal impact on market sentiment this morning. 

The twin retail sales releases were mixed at best, with the ISCS-Goldman Sachs survey reporting that sales rose 0.2% in the first week of June compared to the last week of May, though on a year to year basis sales are down 0.8%. A more ominous report came from the Johnson Redbook survey, which said  sales in June are so far down 4.3% compared to May.

The 10 am Wholesale Trade report that inventories of U.S. wholesalers fell 1.4% in April, contributing to a 6.2% fall from April 2008.  In addition, the estimate for March was revised downward by 0.1%. 

Just before the release, analysts at IHS Global Insight said the inventory cycle will be the key to whether the economy grows this year. 

“Inventories took more than 2 percentage points out of first-quarter GDP growth, but inventory-sales ratios have barely begun to adjust, so we expect inventories to be a drag on growth again in the second quarter,” they wrote. “Only in the second half of the year, as the rate of inventory decline slows, will the inventory cycle become a plus for growth.”

With no more data to come out, it’s anyone’s guess where stocks will go, but any news from Treasury on the TARP repayment is sure to give markets some direction.